On Being a Number


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Presented at ACLU of Washington on Oct. 11, 2012

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  • Going to take an egregious case to obtain liability based on inaccurate report alone – no field for critical info.
  • Remedies not very strong; 1681m not privately actionable
  • On Being a Number

    1. 1. Eric Dunn, Staff AttorneyNorthwest Justice Project401 Second Ave. S., Ste. 407Seattle, Washington 98104Tel. (206) 464-1519, ext. 234EricD@nwjustice.org 1
    2. 2. Ermergerd. Mah permernernt rekerd!Many people believe there exists, insome mysterious place, a single,meticulously updated “permanentrecord” on each person that isaccessible to employers, housingproviders, educational institutions,lenders, police and other governmentagencies, et al. 2
    3. 3. Information is kept in disparate places. Data miners gatherinformation and generate “consumer reports.” Differentconsumer reports come from different sources and containdifferent types of information. 3
    4. 4. What is a “Consumer Report?” “[A]ny written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal15 USC 1681a(d) characteristics, or mode of living which is usedRCW 19.182.010(4)(a) or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for— (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under [15 USC] 1681b.” 4
    5. 5. Consumer Report: ReduxAny written, oral, or other communicationBy a consumer reporting agencyOf any information bearing on a consumer’s: • Credit worthiness, standing, capacity, • Character, reputation, characteristics, mode of livingUsed or collected, wholly or partly, as factor for: • Consumer credit, insurance, housing, employment • License or other government benefit • Other legitimate business need: • Transaction initiated by consumer; or • In connection with existing account 5
    6. 6. Investigative Consumer Reports• Consumer report that includes information “obtained through personal interviews with neighbors, friends, or associates . . . or with others with whom the consumer is acquainted or who may have knowledge” – 15 USC 1681a(e); RCW 19.182.010(10)
    7. 7. Consumer Reports: Exclusions (RCW 19.182.010(4)(b))Report solely concerning transactions or experiences between the consumerand the person making the reportA report by a credit card (or similar device) issuer approving or authorizing aspecific extension of creditA report to a third party, who requested a specific extension of credit directly toa consumer, whether or not to extend the credit, if consumer is informedA list compiled by a CRA for a client to use in direct marketing of goods orservices (but not offers of credit)A report solely conveying a decision whether to guarantee a check in responseto a third party’s requestA report furnished in connection with commercial credit
    8. 8. Common Consumer ReportsFinancial credit reportsCriminal background checksLandlord/Employment verificationReference interviewsBanking/checking account reportsProfessional licensing reports 8
    9. 9. Most “specialty” screening reports, suchas employee background checks used inhiring and promotion decisions, or“tenant-screening reports” thatresidential landlords use for choosingtenants, are actually compilations thatcombine multiple consumer reports intoa single package. 9
    10. 10. Eviction Credit CriminalTenant/Employment Screening Report 10
    11. 11. Fair Credit Reporting Act (X2)• Federal: 15 USC 1681 et seq.• State: RCW 19.182 et seq.• To whom the FCRAs pertain: • Consumer Reporting Agencies • Users (of consumer reports) • Furnishers (of consumer information) • Federal only
    12. 12. • Who may obtain a consumer report What • When a consumer report the may be procured FCRAs • What consumer report may containregulate • How CRAs must prepare consumer reports 12
    13. 13. 13
    14. 14. Consumer Reporting Agencies“The term “consumer reporting agency” means anyperson which, for monetary fees, dues, or on acooperative nonprofit basis, regularly engages inwhole or in part in the practice of assembling orevaluating consumer credit information or otherinformation on consumers for the purpose offurnishing consumer reports to third parties, andwhich uses any means or facility of interstatecommerce for the purpose of preparing orfurnishing consumer reports.” -- 15 USC 1681a(f) -- RCW 19.182.010(5)
    15. 15. CRAs: Evil Private Corporations“Big 3” Financial Tenant/EmploymentO Other specialty CRAs On-Site Manger, HireRight,Credit Reports FAS, Kroll Factual Data • Chexsystems, Fair • Criminal Background Isaacs, etc.• Equifax, Experian, TransUnion • Choicepoint (LexisNexis), Intelius, USIS
    16. 16. Furnishers Public Other Specialty Screening Records CRAs Step 1: CRA obtains information from (private ) furnishers, CRA public records, and other CRAs Step 2: CRA compiles information into a User report, transmits to end users (such as landlords, employers) 16
    17. 17. What does a consumer report look like? 17
    18. 18. Miscellaneous DisclaimersCredit Information ID Verification Employment VerificationTerrorist Database Search Public Records Disclaimer 18
    19. 19. Reference Check Criminal HistorySex Offender Check 19
    20. 20. Eviction HistoryCollection Accounts & Civil Judgments Recommendations 20
    21. 21. Outdated Information• Both federal & state FCRAs prohibit reporting of certain records after a period of time • 15 USC 1681c(a) • RCW 19.182.040(1) – Certain exceptions apply – State & federal statutes are not the same 21
    22. 22. Time Limits: Federal (15 USC 1681c(a) Bankruptcy • 10 years from adjudication Collection, tax • 7 years from date of entry, or lien, civil suit/ jdgmt, arrest • Limitations period expiresAny other adverse information, • 7 yearsexcept convictions 22
    23. 23. Time Limits: State (RCW 19.182.040) Bankruptcy • 10 years from adjudicationCollections, tax liens,civil suit/ jdgmt, adult • 7 years or limitations period criminal record Juvenile Record • Until subject is age 21 Any other adverse information • 7 years 23
    24. 24. Federal: State: Credit or life Credit or life insurance with insurance with $150k < principal $50K < principal Employment Employment application if application if $75K < salary $20K < salary 24
    25. 25. “Whenever a consumer reporting agencyprepares a consumer report it shall followreasonable procedures to assure maximumpossible accuracy of the information concerningthe individual about whom the report relates.” -- 15 USC 1681e(b); RCW 19.182.060(2) 25
    26. 26. • Information one CRA obtains from anotherResale of • Original CRA has duty to followConsumer reasonable procedures to assure maximum possible accuracy Reports • Reseller must accurately report the original information • 15 USC 1681e(e) 26
    27. 27. To be of “maximumpossible accuracy,”information must be:• True• Complete• Presented in a way that is not misleading 27
    28. 28. Criminal Records – 1 Found!State: WA County: King No 99-00000-0 D: GUILTYCharge: Burglary 2° (Felony) Sentence: PROB 36 moNotes: Hint: If this report was made in connection with a 2011 transaction, might it interest the user to know that the offense and disposition occurred in 2000? 28
    29. 29. CRA not liablefor inaccuratereport alone • Consumer must show prima facie case: Two-step inaccurate report analysis: • CRA can avoid liability by proving it followed reasonable procedures 29
    30. 30. 15 USC 1681i; RCW 19.182.090 30
    31. 31. Dispute Procedure: Summary Consumer may dispute item with CRACRA must “reinvestigate” the disputed information item within 30 daysCRA must correct or delete the disputed information item unless verifiedCRA must notify user(s) if information is changed or deleted as a result of a dispute 31
    32. 32. FCRA Disputes (II)CRA must use reasonableprocedures to reinvestigate,verify disputed information CRA may not charge a fee• Must consider information consumer for reinvestigating submitsCRA must notify furnisher of Dispute Statementsdisputed item • If reinvestigation does not resolve• Federal FCRA permits consumer to dispute, consumer may file “brief lodge dispute directly with furnisher, 15 statement setting forth the nature of USC 1681s-2 the dispute” for inclusion in future reports 32
    33. 33. Automated Reinvestigation (e-Oscar)• 15 USC 1681i(a)(5)(D): “Any consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall implement an automated system through which furnishers of information to that consumer reporting agency may report the results of a reinvestigation that finds incomplete or inaccurate information in a consumer’s file to other such consumer reporting agencies.” – e-Oscar (www.e-Oscar.org) • ACDVs initiated by a CRA on behalf of a consumer are routed to the appropriate Data Furnisher [and] is returned to the initiating CRA with updated information (if any) relating to the consumers credit history. If an account is modified or deleted, carbon copies are sent to each CRA with whom the DF has a reporting relationship.• Plain English: nationwide CRAs must subscribe to a system that enables furnishers to automatically update consumer information on file with the CRAs
    34. 34. Remedies: Federal FCRA• Negligent Violations (15 USC 1681o) – Actual damages – Costs & Attorney Fees• Willful Non-Compliance (15 USC 1681n) – Actual or statutory damages ($100 to $1,000) – Punitive damages (as determined by court) – Costs & Attorney Fees• Guimond v. Trans Union, 45 F.3d 1329 (9th Cir. 1995) – Denial of credit not a prerequisite for actual damages – Actual damages can be emotional distress/humiliation
    35. 35. Remedies: Washington CPA• Violation of state FCRA is per se violation of Wash. Consumer Protection Act, RCW 19.86• Relief available: – Actual damages – Costs of action & Attorney Fees – $1,000 “penalty” for a willful violation
    36. 36. End Users (of consumer reports)Pre-screening • Employment: RCW 19.182.020(2) disclosures • Housing: RCW 59.18.257(1)(a) Content • Employment: RCW 19.182.020(2)(c) (credit info.) restrictions • Housing: None (but see S.L. 6315 of 2012)Pre-adverse • Employment only: RCW 19.182.020(2)(d)action notice Adverse • General: RCW 19.182.110action notice • Housing only: RCW 59.18.257(1)(c) 36
    37. 37. Furnisher Duties• 15 USC 1681s-2 (Federal FCRA Only) – May not furnish information to a CRA if: • Person “knows or has reasonable cause to believe that the information is inaccurate;” or • Information is inaccurate and consumer has notified the furnisher of the inaccuracy – Must correct and update information • Person must regularly furnish information to CRAs • Duty to promptly notify CRA of inaccurate information – Must inform CRA if consumer disputes item• Nelson v. Chase Manhattan Mtg. Corp., 282 F.3d 1057 (9th Cir. 2002) – Private cause of action against furnisher for violation
    38. 38. Furnisher Disputes• Consumers may dispute item directly with furnisher – 15 USC 1681i(a)(8) will entitle – Dispute must: • Identify specific information disputed • Explain basis for dispute & evidence • Delivered to furnisher at proper address – Furnisher must: • Investigate (same basic procedures as CRA) • Written notice of determination to consumer • Promptly report any corrections to CRAs – FTC regulations: 16 CFR 660.4